Total public spending on primary to tertiary education as a percentage of total government expenditure averages 11% across OECD countries, and it ranges from around 6% to around 17%.
Between 2011 and 2015, the average share of total government expenditure devoted to public spending on primary to tertiary education remained relatively stable across OECD countries, at around 11%. In half of OECD countries, the share decreased, while in others the share increased by more than 10% over the same period.
In non-tertiary education (primary, secondary and post-secondary non-tertiary levels), spending is decentralised, with 58% of final funds managed by regional and local governments. In tertiary education, on average, 85% of final public funds (after transfers between levels of government) come from the central government.
Education at a Glance 2018
Indicator C4. What is the total public spending on education?
Figure C4.1. Change in total public expenditure on education as a share of total government expenditure between 2011 and 2015
1. Primary education includes pre-primary.
Countries are ranked in descending order of the change in total public expenditure on primary to tertiary education as a percentage of total government expenditure.
Source: OECD / UIS / Eurostat (2018), Table C4.3. See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Context
Decisions concerning budget allocations to various sectors (including education, healthcare, social security and defence) depend on countries’ priorities and the options for private provision of these services. Government funding is necessary in situations where the public benefit is high but private costs are greater than private benefits. Education is one area in which all governments intervene to fund or direct the provision of services. As there is no guarantee that markets will provide equal access to educational opportunities, government funding of educational services is necessary to ensure that education is not beyond the reach of some members of society.
The economic crisis has put pressure on public budgets with the result that less public funding has been allocated to education. Budget cuts can represent better allocation of government funds and may generate gains in efficiency and economic dynamism, but they can also affect the quality of government-provided education, particularly at a time when investment in education is important to support economic growth.
This indicator compares total public spending on education with total government expenditure across OECD and partner countries. It also includes data on the different sources of public funding in education (central, regional and local governments) and on transfers of funds between these levels of government.
Other findings
In 2015, public transfers and payments to the non-educational private sector for primary to tertiary education represented 1% of total government expenditure and accounted for 9% of public expenditure on education, with the remaining 91% corresponding to direct expenditure on educational institutions.
OECD and partner countries spend more than twice as much on non-tertiary education (primary, secondary and post-secondary non-tertiary levels) as they do on tertiary education, mainly as a result of near-universal education at lower levels.
The proportion of government expenditure devoted to primary to tertiary education decreased between 2005 and 2015 in more than 70% of the countries with available data for both years. It remained stable in most other countries and increased in a number of countries, most notably in Chile, Brazil and Israel, where the increase was just over 2.5 percentage points.
On average across OECD and partner countries, the funds transferred from central to regional and local levels of government at non-tertiary levels of education are larger than at tertiary level. On average across OECD countries, the 56% of public funds for non-tertiary education provided by the central government drop to 42% after transfers between levels of government are accounted for. As a result, the share of local funds rises from 24% to 39%.
Analysis
Overall level of public resources invested in education
Countries differ in the share of total public expenditure devoted to education. In 2015, total public expenditure on primary to tertiary education as a percentage of total government expenditure for all services averaged 11% in OECD countries. However this share varies across OECD and partner countries, ranging from around 6% in Greece and Hungary to at least 17% in Chile, Mexico and New Zealand, and around 30% in Costa Rica (Table C4.1 and Figure C4.2).
Overall, significant government funding is devoted to non-tertiary levels of education. In most countries, and on average across OECD countries, roughly three-quarters of the total public expenditure on primary to tertiary education (about 8.1% of total government expenditure) was devoted to non-tertiary education. This is largely explained by the near-universal enrolment rates at non-tertiary levels of education (see Indicator B1), the demographic structure of the population (Table C4.1), and the fact that in many OECD countries, the funding structure for tertiary education is largely private.
The total public expenditure devoted to tertiary education varies widely among countries. On average across OECD countries, total public expenditure on tertiary education amounts to 27% of total public expenditure from primary to tertiary education. Percentages range from 15%-20% in Hungary, Israel, Luxembourg and Portugal to around 35% in Austria, Estonia, the Slovak Republic and Turkey (Table C4.1).
Total public expenditure on education includes direct expenditure on institutions (such as operating costs of public schools), transfers to the non-educational private sector that are attributable to educational institutions, and public subsidies to households for living costs that are not spent in educational institutions. Public transfers and payments to the non-educational private sector for primary to tertiary education (such as public student loans, grants, scholarships and subsidies to private student loans) represent a small share of total government expenditure in OECD and partner countries, but significant differences are observed across countries (Figure C4.2). In 2015, these public expenditures represented 1% of total government expenditure and accounted for 9% of public expenditure on education, with the remaining 91% corresponding to direct expenditure on educational institutions. However, the percentage varies by country: public transfers and payments to the non-educational private sector represent between 2% and 3% of total government expenditure in countries such as Australia, Chile, Ireland, New Zealand and the United Kingdom, and less than 0.3% in the Czech Republic, Greece and Luxembourg.
The relative size of public budgets must be taken into account when considering public spending on education as a share of total government expenditure. Total public expenditure on education as a share of gross domestic product (GDP) presents quite a different picture. In 2015, total public expenditure on primary to tertiary education as a share of GDP was 4.5% on average across OECD countries. Across OECD and partner countries, it ranged from 3.3% or below in the Czech Republic, Japan, and the Russian Federation to around 7% in Norway.
The share of total government expenditure as a proportion of GDP varies greatly among countries (Table C4.1). In 2015, almost one-third of countries with available data reported that total government expenditure on all services was more than 50% of GDP, including Finland (57%) and Norway (58%) with the highest shares. As noted above, a high share of total government expenditure devoted to public expenditure on education does not necessarily translate into a high share when compared to a country’s GDP. For example, Ireland allocates 13% of its total government expenditure to education (more than the OECD average of 11%), but total public expenditure on education as a share of GDP is relatively low (3.7% compared to the OECD average of 4.5%). This can be explained by the relatively low level of total government expenditure compared to GDP in Ireland (29%).
Figure C4.2. Composition of total public expenditure on education as a percentage of total government expenditure (2015)
1. Year of reference 2016.
2. Primary education includes pre-primary programmes.
Countries are ranked in descending order of total public expenditure on primary to tertiary education as a percentage of total government expenditure.
Source: OECD / UIS / Eurostat (2018), Table C4.1. See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Changes in total public expenditure on education as a percentage of total government expenditure, 2005-15
OECD spending patterns remained relatively stable between 2005 and 2015 (Table C4.3), at around 11% on primary to tertiary education. However, over this period, the share of total government expenditure on primary to tertiary education within total government expenditure decreased by 0.5 percentage points on average across OECD countries and in more than 70% of countries with available data, for both 2005 and 2015. The decrease was especially substantial (3.0 percentage points) in Mexico and Slovenia, while Brazil, Chile and Israel experienced the largest increases (just over 2.5 percentage points).
Total expenditure dropped slightly between 2005 and 2011, mainly due to the 2008 financial crisis. During this period, total public expenditure on primary to tertiary education as a percentage of total public expenditure decreased in two-thirds of OECD countries (20 of 30 countries with available data for this period), and by 0.4 percentage points on average. Countries such as Mexico, Iceland and Lithuania were severely hit during this period and the share of total public expenditure on primary to tertiary education as a percentage of total public expenditure fell by just over 2 percentage points. Exceptions to that trend included Brazil, Chile and Israel, which showed increases just over 2 percentage points (Table C6.3).
A similar tendency has been observed in the years following the crisis, between 2011 and 2015, likely due in part to countries facing pressure to pursue fiscal consolidation (Table C6.3 and Figure C4.1). Despite the fact that public expenditure on primary to tertiary education increased over that period in a large number of countries, high increases were also observed in total government expenditure. Over this four-year period, only about 40% of countries with available data increased their share of public expenditure on education within total government expenditure, with Israel and Latvia showing the greatest increase (around 1 percentage point) whereas 80% of them increased total government expenditure for all goods and services. However, in 18 OECD and partner countries the increase in public expenditure on education was lower than the increase in government spending overall. Notable cases are Estonia, Norway and Slovenia, where the relative increase in total government expenditure was between 10 and 20 percentage points higher than the increase in public expenditure on education. In 6 out of these 18 countries, public expenditure on education actually declined between 2011 and 2015, while total government expenditure rose (Table C4.3 and Figure C4.1).
Sources of public funding invested in education
The division of responsibility for education funding between levels of government (central, regional and local) is an important factor in education policy. Indeed, important decisions regarding education funding are made both at the level of government where the funds originate and the level of government at which they are finally spent. At the initial sources of education funding, decisions are made on the volume of resources allocated and any restrictions on how that money can be spent. At the final level of government education funding, additional restrictions may be attached to the funds, or this level of government may even pay directly for educational resources (e.g. teachers’ salaries).
In some countries, education funding is centralised, while in others it can be decentralised, with funds transfers between levels of government. Complete centralisation can cause delays in decision making. Decisions that are far removed from those affected also can fail to address changes in local needs and desired practices. Under complete decentralisation, however, units of government may differ in the level of educational resources they spend on students, due to either differences in priorities related to education or differences in the ability to raise education funds. Wide variability in education standards and resources can also lead to inequality of educational opportunity and insufficient attention to long-term national requirements.
In recent years, many schools have become more autonomous and decentralised, as well as more accountable to students, parents and the public at large for their outcomes. The results of the OECD Programme for International Student Assessment (PISA) suggest that when autonomy and accountability are intelligently combined, they tend to be associated with better student performance (OECD, 2016[1]).
The levels of government responsible for funding education differ between levels of education. Typically, public funding is more centralised at the tertiary level than at lower levels of education. In 2015, on average across OECD countries, 56% of the public funds for non-tertiary education came from the central government before transfers to the various levels of government, compared to 86% of the funds for tertiary education (Table C4.2).
The division of responsibility for funding in non-tertiary levels of education varies greatly among countries (Table C4.2 and Figure C4.3):
On average, central and regional governments are the main initial and final sources of funds in non-tertiary education. However, the central government is the only main initial source of funds and the only final purchaser of educational services in Costa Rica and New Zealand. In countries such as Chile, Colombia, France, Greece, Hungary, Ireland, Israel, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Turkey, the central government is still the source of the majority of initial funds and the main final purchaser of educational goods and services. In contrast, in Canada, Germany, Norway, Poland, Sweden, Switzerland and the United States, the central government generates and spends less than 10% of education funds.
In Austria, Estonia, Korea, Lithuania, Mexico and the Slovak Republic, the central government is the main initial source of funds, but regional and local authorities are the main final purchasers of educational services.
Regional governments are both the main initial source and the main final spender of education funds in Australia, Belgium, the Czech Republic, Germany, Spain and Switzerland. In Brazil and Canada, regional governments are the predominant source of initial funds, but local authorities are the main final purchasers of educational services.
In Finland, Norway, the United Kingdom and the United States, local authorities are both the main initial source of funds as well as the main final purchasers of educational services.
On average across OECD countries, more funds are transferred from central to regional and local levels of government in non-tertiary education than in tertiary education. This extends the scope for decentralisation at non-tertiary levels of education. On average across OECD countries, the 56% of public funds for non-tertiary education provided by the central government drop to 42% after transfers to other levels of government are accounted for, while the share of local funds rises as a result from 24% to 39%. There is great variation between countries in the source of funds after transfers from central to lower levels of government. In Korea, Lithuania, Mexico and the Slovak Republic, the difference is more than 50 percentage points after transfers to regional and local governments, while in Australia, Austria, Chile, Estonia, Finland and Latvia, the difference is between 25 and 40 percentage points. In Canada and the United States, the share of regional funding decreases by 40 percentage points or more after transfers to local levels of government (Table C4.2 and Figure C4.3).
Tertiary education, however, is much more centralised than non-tertiary education, as the proportion of public funds coming from the central government is relatively large, both before and after transfers among levels of government (Table C4.2). Across the OECD on average, 86% of funds before transfers are managed by the central government and this barely changes when intergovernmental transfers are taken into account. In most OECD and partner countries with data available, the central government provides directly for more than 60% of public funds in tertiary education and in 15 countries, the central government is the only source of initial funding and there are no transfers to regional or local governments. In contrast, countries such as Belgium, Germany, Spain and Switzerland source over 60% of tertiary-level funding from regional governments with very little or nothing transferred down to local governments. Local authorities typically do not have an important role in financing tertiary education, with the exception of Ireland and the United States, where around 10% of the funds are generated and spent by local governments.
Figure C4.3. Distribution of initial sources of public funds for education and change in government levels’ share of funds after intergovernmental transfers (2015)
1. Year of reference 2016.
2. Central transfers to regional governments include local initial funds, and regional final funds also include local final funds.
3. Primary education includes pre-primary programmes.
Countries are ranked in descending order of the share of initial sources of funds from the central level of government.
Source: OECD / UIS / Eurostat (2018), Table C4.2. See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Definitions
Intergovernmental transfers are transfers of funds designated for education from one level of government to another. They are defined as net transfers from a higher to a lower level of government. Initial funds refer to the funds before transfers between levels of government, while final funds refer to the funds after such transfers.
Public expenditure on education covers expenditure on educational institutions and expenditure outside educational institutions such as support for students’ living costs and other private expenditure outside institutions, contrary to previous indicators C1, C2 and C3 that focused only on spending in educational institutions. Public expenditure on education includes expenditure by all public entities, including the ministry of education and other ministries, local and regional governments, and other public agencies. OECD countries differ in the ways in which they use public money for education. Public funds may flow directly to institutions or may be channelled to institutions via government programmes or via households. Public funds may be restricted to the purchase of educational services or may be used to support students’ living costs.
All government sources of expenditure on education, apart from international sources, can be classified under three levels of government: 1) central (national) government; 2) regional government (province, state, Bundesland, etc.); and 3) local government (municipality, district, commune, etc.). The terms “regional” and “local” apply to governments with responsibilities are exercised within certain geographical subdivisions of a country. They do not apply to government bodies with roles defined in terms of responsibility for particular services, functions or categories of students that are not geographically circumscribed.
Total government expenditure corresponds to non-repayable current and capital expenditure on all functions (including education) of all levels of government (central, regional and local), non-market institutions that are controlled by government units, and social security funds. It does not include expenditure derived from public corporations, such as publicly owned banks, harbours and airports. It includes direct public expenditure on educational institutions (as defined above), as well as public support to households (e.g. scholarships and loans to students for tuition fees and student living costs) and to other private entities for education (e.g. subsidies to companies or labour organisations that operate apprenticeship programmes).
Methodology
Figures for total government expenditure and GDP have been taken from the OECD National Accounts Database (see Annex 2).
Public expenditure on education is expressed as a percentage of a country’s total government expenditure. The statistical concept of total government expenditure by function is defined by the National Accounts’ Classification of the Functions of Government (COFOG). There are strong links between the COFOG classification and the UNESCO, OECD and Eurostat (UOE) data collection, although the underlying statistical concepts differ to some extent (Eurostat (European Commission), 2011[2]).
Expenditure on debt servicing (e.g. interest payments) is included in total government expenditure, but it is excluded from public expenditure on education, because some countries cannot separate interest payments for education from those for other services. This means that public expenditure on education as a percentage of total government expenditure may be underestimated in countries in which interest payments represent a large proportion of total government expenditure on all services.
For more information please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[3]) and Annex 3 for country-specific notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Lithuania was not an OECD member at the time of preparation of this publication. Accordingly, Lithuania does not appear in the list of OECD members and is not included in the zone aggregates.
Source
Data refer to the financial year 2015 (unless otherwise specified) and are based on the UOE data collection on education statistics administered by the OECD in 2017 (for details see Annex 3 at http://dx.doi.org/10.1787/eag-2018-36-en). Data from Argentina, China, Colombia, India, Indonesia, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
Note regarding data from Israel
The statistical data for Israel are supplied by and are under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
References
[2] Eurostat (European Commission) (2011), “Manual on sources and methods for the compilation of COFOG Statistics - EU Law and Publications”, Methodologies and Working papers, Eurostat, Luxembourg, http://dx.doi.org/10.2785/16355.
[3] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
[1] OECD (2016), PISA 2015 Results (Volume II): Policies and Practices for Successful Schools, PISA, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264267510-en.
Indicator C4 Tables
Table C4.1. Total public expenditure on education as a percentage of total government expenditure (2015)
Table C4.2. Share of sources of total public funds devoted to education (2015)
Table C4.3. Trends in total public expenditure on education as a percentage of total government expenditure (initial sources of funds, 2005, 2011 and 2015)
Cut-off date for the data: 18 July 2018. Any updates on data can be found on line at http://dx.doi.org/10.1787/eag-data-en. Data can also be found at http://stats.oecd.org/, Education at a Glance Database.
Table C4.1. Total public expenditure on education as a percentage of total government expenditure (2015)
Direct public expenditure on educational institutions plus public transfers and payments to the non-educational private sector, as a percentage of total government expenditure, by level of education
Note: Public expenditure presented in this table includes both public transfers/payments to the non-educational private sector which are attributable to educational institutions and those to households for living costs, which are not spent in educational institutions. Therefore, the data presented here (before transfers) exceed those from public spending on institutions found in Tables C1.2 and C2.2.
1. Primary education includes pre-primary programmes.
2. Year of reference 2016.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.
Table C4.2. Share of sources of total public funds devoted to education (2015)
Before and after transfers, by level of education
Note: Some levels of education are included with others. Refer to “x” code in Table C4.1 for details.
1. Primary education includes pre-primary programmes.
2. Year of reference 2016.
3. Central transfers to regional governments include local initial funds, and Regional final funds also include local final funds.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.
Table C4.3. Trends in total public expenditure on education as a percentage of total government expenditure (initial sources of funds, 2005, 2011 and 2015)
Direct public expenditure on educational institutions plus public subsidies to households and other private entities, as a percentage of total government expenditure, by level of education, by year
Note: Public expenditure presented in this table includes both public transfers/payments to the non-educational private sector which are attributable to educational institutions and those to households for living costs, which are not spent in educational institutions. Therefore, the data presented here (before transfers) exceed those from public spending on institutions found in Tables C1.2 and C2.2. Some levels of education are included with others. Refer to “x” code in Table C4.1 for details.
1. Primary education includes pre-primary programmes.
Source: OECD / UIS / Eurostat (2018). See Source section for more information and Annex 3 for notes (http://dx.doi.org/10.1787/eag-2018-36-en).
Please refer to the Reader’s Guide for information concerning symbols for missing data and abbreviations.